Myth: Assessed value will always equate market value.
Reality: While most states uphold the suggestion that assessed value is the same as estimated market value, this generally is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the area have not been reassessed for an prolonged period.
Myth: The opinion of value of a home will be different depending upon whether the appraisal is ordered for the buyer or the seller.
Reality: The appraiser has no vested interest in the outcome of the report and should render his job with independence, objectivity and impartiality - no matter for whom the appraisal is conducted.
Myth: Market value will equate to replacement cost.
Reality: Without any pressure from any external parties to purchase or sell, market value is what a willing buyer would pay a willing seller for a specific home. If the house were rebuilt, the dollar amount necessary to do so would be the replacement cost.
Myth: Appraisers use a calculation, such as a specific price per square foot, to figure out the value of a house.
Reality: Appraisers complete a full analysis of all factors pertaining to the value of a property, including its location, condition, size, proximity to facilities and recent values of comparable properties.
Myth: When the economy is robust and the sales prices of properties are found to be appreciating by a certain percentage, the other properties in the proximity can be expected to increase based on that same percentage.
Reality: The appreciation of a specific property has to be concluded on an individualized basis, factoring in information on comparable homes and other relevant elements. It makes no difference if the economy is excellent or poor.
Myth: Just seeing what the house looks like on the outside gives an excellent idea of its value.
Reality: House value is determined by a multitude of variables, including area, condition, improvements, amenities, and market trends. An outside-only inspection definitely can't provide all of the information necessary.
Myth: Because consumers pay for the appraisal when applying for loans to purchase or refinance their home, they legally own their appraisal report.
Reality: The document is, in fact, legally owned by the lender - unless the lender "releases its interest" in the appraisal report. However, consumers have to be given a copy of the report upon written request, under the Equal Credit Opportunity Act.
Myth: There's no reason for home buyers to even care about what the appraisal contains so long as their lending agency is satisfied.
Reality: Only when home buyers check out a copy of their report can they ensure its accuracy and know if they should ask questions. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal report makes an excellent record for future reference, comprised of useful and often-revealing data - including the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the proximity.
Myth: There is no reason to order an appraisal unless you are trying to get an assessment of the value of a property during a sales transaction involving a lender.
Reality: Depending upon their qualifications and designations, appraisers can and will provide a multitude of services, including advice for estate planning, dispute resolution, zoning and tax assessment review and cost/benefit analysis.
Myth: An appraisal report is no different than a home inspection report.
Reality: An appraisal does not serve the same purpose as an inspection. The point of an appraisal is to find an opinion of market value during the appraisal process and the production of the appraisal. House inspectors will create a report that will explain the condition of the house and its major components and possible damage.